# aickareth

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Education

Published on February 19, 2008

Author: smsalgebra

Source: authorstream.com

Slide1:  By: Crème de la Crème Anh Huynh Chloe Ng Jalitta Aickareth Slide3:  R = revenue F = fixed costs V = variable costs C = total cost p = price of tickets N = the number of tickets P = profit Slide4:  Revenue: R=np Variable Cost: V=mn Total Cost: C = V + F Profit: P = R - C Slide6:  Number of tickets Revenue R= 20n Slide8:  Advertising \$30,000 Ticket Agency \$25,000 Slide9:  Starplex Amphitheater Who’s That? Ms. Teak Dixie Chickens Cotton Bowl Who’s That? Ms. Teak Dixie Chickens \$163,000 \$190,000 \$203,000 \$178,000 \$205,000 \$218,000 Slide13:  On day one, the cost was ignored so that we could build a revenue model. On day two, the revenue was ignored to build a cost model. Today, we are going to combine the two to see where Sam stands in making a profit. Profit is the amount of revenue left after all costs are paid. The equation for profit is P= R- C The break-even point occurs when the revenues and costs are the same and Sam does not lose any money. Slide14:  Number of tickets sold Amount of money Revenue Costs Break-even point Slide15:  The past models were created with assumptions of ticket price, band, and the stadium. Now, we will consider ticket price. Sales demand is the relationship between ticket price and ticket sales. As the price of the tickets goes up, it is likely that the ticket sales will start to drop off. Because the ticket sales will start to drop off, the slope of the line will be negative. Sales demand equation can be written in slope-intercept form. Example: n= -250p+27740 Slide16:  Increasing ticket price Ticket sales N= -250p+27740 Slide17:  Using the sales demand model, we can now calculate the revenue and the costs. R=pn Since the sales demand model represents n, we would multiply that by p to find the revenue. Example R= p(-250p+27740) = -250p2+27740p Variable cost: V= 4.5n Fixed cost: F= band cost + stadium cost + other costs Total Cost: C= V+F Profit: P=R-C Slide18:  On day four, we made used a sales demand model to find the profit. Today, we will use a consumer research report to determine the sales demand model for the Starplex Amphitheater and the Cotton Bowl. After applying the line of best fit, we have the sales demand equation for each place. Once we have the sales demand equation, we can figure out the revenue, the costs, and the profits. Slide19:  Price (p) Ticket Sales (n) \$10 20,000 \$20 18,000 \$30 17,000 \$40 16,000 \$50 14,500 \$60 13,000 \$70 10,500 N=-146.43p +21428.57 Slide20:  Price (p) Ticket Sales (n) \$10 25,000 \$20 24,000 \$30 22,000 \$40 19,000 \$50 16,000 \$60 14,000 \$70 10,500 N= -248.21p + 28571.43 Slide21:  Starplex Amphitheater V = 4.5n = 4.5 (-146.43p+21428.57) V= -658.94p+96428.57 Cotton Bowl V = 4.5n = 4.5 (-248.21p+28571.43) V = -1116.95p+128571.44 Slide22:  Starplex Amphitheater Who’s That? Ms. Teak Dixie Chickens Cotton Bowl Who’s That? Ms. Teak Dixie Chickens Slide23:  P=R-C = (-146.43p2+21428.57p) – (-658.94p+96428.57+163,000) = -146.43p2 +22087.51p-259428.57 Slide25:  P=R-C = (-146.43p2+21428.57p) – (-658.94p+96428.57+190,000) = -146.43p2 +22087.51p-286428.57 Slide27:  P=R-C = (-146.43p2+21428.57p) – (-658.94p+96428.57+203,000) = -146.43p2 +22087.51p-299428.57 Slide29:  P=R-C = (-248.21p2+28571.43p) – (-1116.95p + 128571.44 + 178,000) = -248.21p2+29688.38p-306571.94 Slide31:  P=R-C = (-248.21p2+28571.43p) – (-1116.95p + 128571.44 +205,000) = -248.21p2+29688.38p-333571.44 Slide33:  P=R-C = (-248.21p2+28571.43p) – (-1116.95p + 128571.44 + 218,000) = -248.21p2+29688.38p-346571.44 Slide35:  From the models above, we would recommend that Sam book Who’s That? at the Cotton Bowl, and his ticket price should be about \$60 in order for him to maximize his profit. The highest point on the parabola is the maximum profit that Sam can make at that place. The maximum profit for Who’s That? at the Cotton Bowl is about \$581,175.

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